A significant milestone in the GCC was achieved when UAE along with Saudi Arabia, Bahrain, Qatar, Kuwait, and Oman announced the adoption of indirect tax system, namely VAT (Value Added Tax). The VAT is the largest-ever tax reform in the fiscal history of UAE. It charts a new course for indirect tax system in UAE that focuses on cooperation instead of self-interests. It is a giant leap from the legacy tax system.

The GCC countries under the GCC VAT Agreement have aiming to adopt 5% VAT from 1st January, 2018. for countries that are VAT prepared and 1st January, 2019 for GCC countries that are not VAT prepared.

UAE has declared the adoption of VAT from 1st January, 2018.

UAE will introduce two laws and one guidance regulation to govern the implementation of VAT. First law is the Tax Procedures Law. This law will govern the general rules and procedures relating to all taxes in the UAE. Second Law is the VAT Law. This law will govern the application of VAT in UAE. This is built on the GCC VAT Framework. The Guidance regulation will be named as the VAT Executive Regulations and will support the VAT law and give clarifications.